Sportingbet profits lifted by best-ever Cheltenham

Sportingbet, the online gaming business, issued a strong trading statement yesterday for its final quarter, buoyed by its best-ever Cheltenham Festival, held in the middle of last month.

Sportingbet, the online gaming business, issued a strong trading statement yesterday for its final quarter, buoyed by its best-ever Cheltenham Festival, held in the middle of last month.

The company said operating profit for the quarter would not be less than £7.6m compared to £4m in the corresponding quarter in 2003. As a result, profits for the year to 31 March as a whole would be £19.5m compared to £14.6m last year.

Nigel Payne, the company's chief executive, said the number of bets placed on races at the Cheltenham racing event, which includes the Gold Cup, doubled in the quarter. Overall, the volume of bets placed with the group rose 49 per cent to 9.1 million compared to 6.1 million in 2003.

Geographically, Europe showed the strongest growth, rising 111 per cent to 2.9 million bets, while the US rose 27 per cent to 5.7 million bets.

In a further boost to its US business, the company heard last week that the World Trade Organisation (WTO) has ruled that the US must end its restrictions against online bookies, which in most states are illegal. US citizens have been betting on sporting events with internet betting sites located offshore. However this has created legal uncertainty for Sportingbet which has seen its share price lag for most of 2003. The company's rating has improved dramatically with a doubling of the share price since January.

If the WTO ruling is upheld at an anticipated appeal brought by the US government, the decision should prove a significant boost to the company. Mr Payne said: "This could be a very, very major issue for our business." It would allow the company to move its internet business that serves the US on shore, cutting down costs and increasing revenues. "The ruling basically says that you cannot selectively ban a distribution channel," Mr Payne said.

The company's statement said: "New customer sign-ups and gross margin levels have been pleasing, particularly in key events such as the Cheltenham Festival and March Madness Basketball in the US. Recently introduced new products, such as poker, are developing well."

Mr Payne said customers using its website were increasingly demanding entertainment from the site rather than simply laying bets, which is why games such as poker have been added. Sportingbet, founded by Mark Blandford was floated in 2001 and now claims to be the world's biggest online betting group.